Approved payables finance is a supplier-finance arrangement based on buyer-approved invoices that are scheduled for payment at maturity. A finance provider may offer the supplier early payment after the buyer confirms the payable, while the buyer pays the provider on the agreed due date.
How does the arrangement work?
- The supplier delivers and invoices the buyer.
- The buyer validates and approves the invoice.
- The approved payable is made available to the finance provider.
- The supplier may elect early payment at the offered discount.
- The buyer pays the finance provider at maturity.
Illustrative early-payment calculation
Assume a $100,000 approved invoice is due in 60 days and the supplier accepts a simple 1.2% financing discount. The discount is $100,000 × 1.2% = $1,200, so the illustrative early-payment amount is $100,000 − $1,200 = $98,800. This example excludes taxes, platform fees and day-count conventions.
Who bears which obligation?
The supplier’s early-payment terms are agreed with the provider. The buyer remains responsible for paying the approved invoice at maturity under the program terms. Parties should document disputes, credits, cancellations and any right to reverse an approval.
Approved payables finance vs. factoring
Approved payables finance is initiated around buyer-confirmed payables and commonly reflects the buyer’s credit profile. Invoice Factoring is generally arranged by the seller against its receivables and may occur without buyer-led program administration.
